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2021 | OriginalPaper | Buchkapitel

1. Introduction

verfasst von : Roberto Marchionatti

Erschienen in: Economic Theory in the Twentieth Century, An Intellectual History—Volume II

Verlag: Springer International Publishing

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Abstract

The Introduction deals firstly with the historical scenario of the period between the two world wars. The war brought the golden age of liberal capitalism to an end and caused a profound social and economic crisis. Then a synthesis of the development of economic theory is presented: those years were characterized by increasing criticisms of the traditional theoretical apparatus, and by the emergence of new lines of thought and a new strand of theoretical innovations. Lastly, the map of economic theory is sketched. Cambridge maintained its importance, Berlin and Vienna, extremely active in the 1920s, substantially vanished in the 1930s when the Nazis came to power. At the same time, new European centers emerged, first in London, and then in Northern Europe. On the other side of the ocean, the United States saw the increasing consolidation of New York, Harvard and Chicago.

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Nächstes Kapitel Economics in Cambridge and Oxford in the Age of John Maynard Keynes

Economic historians believe that the increase in farm debt in the 1920s, together with US policies that encouraged small, undiversified banks, created an environment favorable to the spread of panic. The heavy farm debt stemmed in part from the response to the high prices of agricultural goods during World War I. American farmers borrowed heavily to purchase and improve land in order to increase production. The decline in farm commodity prices following the war made it difficult for farmers to keep up with their loan payments.

The “Dust Bowl” captured the imagination of American artists and writers. John Steinbeck memorialized the plight of the Dust Bowl refugees (called “Okies”) in his 1939 masterpiece The Grapes of Wrath (Steinbeck 1992 [1939]). Photographer Dorothea Lange documented rural poverty with a series of photographs for the Farm Security Administration. In general, the arts, and the cinema in particular, give us a rich representation of real life during the Great Depression.

At the time, liberal economists did not consider the existence of the gold standard as a cause of the Great Depression. On the contrary, they attributed most of the blame—as Lionel Robbins (1934) did—for the depression on the collapse of the gold standard itself. Although restoring the gold standard may have had deflationary consequences on the global economy and accentuated the depression, it also provided a monetary discipline, a compass for all other countries to follow and to coordinate their policies. The demise of the gold standard meant that there was no longer a basis for pursuing coordinated economic policies internationally.

For a recent interpretation of the New Deal from the perspective of the global history approach, see Patel (2016), who views the New Deal as a key element in America’s repositioning in the world following the Great Depression.

In fact, the Wiener Kreis’s epistemological thinking converged with that of the new econometric movement. Both movements counted on physicalism—a concept for the unification of natural and social sciences introduced by Otto Neurath and Rudolf Carnap, members of the Kries—and verificationism, the philosophical doctrine that emerged in Hans Reichenbach’s Berliner Gruppe and in the Wiener Kreis, which maintains that only statements that are empirically verifiable are cognitively meaningful.

In fact, the fundamental importance of Pareto’s main methodological problems—in particular the relationship between the mathematical formulation of the models and experimental reality—was explicitly emphasized by the mathematical economists of the old generation, both in Europe and in the United States, for whom the econometric movement was the culmination of much previous work.

The University of Lausanne launched a search procedure to fill the post of professor of economics after Pasquale Boninsegni’s retirement in 1939 and received many expressions of interest—among others, from Nicholas Kaldor, John Hicks, Jacob Marschak and Tjalling Koopmans, that is, from economists who then had a crucial role in economics and could have made Lausanne a leading center once again. Due to the increasing international political tension, the university decided to narrow down the list to the French-speaking candidates, and at the end a little-known French economist, Firmin Oulès (1904–1992) was appointed, who held the chair for thirty years. I thank Fiorenzo Mornati for this information found in the archives of the University of Lausanne.

Eichengreen, Barry. 1992. Golden Fetters: The Gold Standard and the Great Depression, 1919–1939. Oxford: Oxford University Press.

Keynes, John Maynard. 1971 [1919]. The Economic Consequences of the Peace. Reprinted in The Collected Writings of J. M. Keynes, vol. 2, ed. Don Moggridge. London: Macmillan and Cambridge University Press.

Kindleberger, Charles.1986. The World in Depression, 1929–1939. Enlarged ed. Berkeley, CA: University of California Press.

Leontief, Wassily. 1948. Econometrics. In A Survey of Contemporary Economics, ed. Howard S. Ellis. Philadelphia: The Blakiston Company for The American Economic Association.

Patel, Kiran Klaus. 2016. The New Deal: A Global History. Princeton: Princeton University Press.CrossRef

Robbins, Lionel. 1934. The Great Depression. London: Macmillan.

Schumpeter, Joseph A. 1954. A History of Economic Analysis. London: Allen & Unwin.

Shackle, G.L.S. 1967. The Years of High Theory: Invention and Tradition in Economic Thought 1926–1939. Cambridge: Cambridge University Press.

Steinbeck, John. 1992 [1939]. The Grapes of Wrath. New York: Penguin.

Tinbergen, Jan. 1949. Du Système de Pareto aux modéles modern. Revue d’économie politique 59: 642–652.

Titel: Introduction
verfasst von: Roberto Marchionatti
Verlag: Springer International Publishing
Buch: Economic Theory in the Twentieth Century, An Intellectual History—Volume II
Print ISBN: 978-3-030-80986-7

Electronic ISBN: 978-3-030-80987-4

Copyright-Jahr: 2021
DOI: https://doi.org/10.1007/978-3-030-80987-4_1